It is the Bitcoin equivalent of "spam" so no real need to worry about it (if you are concerned about it being used to *track* some future tx you make then you might want to do some research about "coin control").

If I understand correctly, InstantDEX will at first require that the coins it trades are in a centralized exchange.  Because of this, is it fair to say that InstantDEX will at first be a method for combining exchange liquidity instead of a method for trading without trusting a centralized exchange?

Of course anything you leave on a central exchange requires you to trust them. However by having a single unified view as to all the possible orders in all the places, if you see an order that happens to be a direct InstantDEX order, then the natural result is to grab the better price. Remember that all the InstantDEX quotes will only have a few NXT fixed fee vs. the ~0.2% commissions for exchanges.

With all of the MGW assets that are added to all the NXT assets, there will be totally decentralized trading possible, at launch. MGW assets are special assets that map 1:1 to the supported coins, and any NXT assetA/assetB trades via InstantDEX (or NXT AE) is fully totally completely decentralized.

Which coins will be supported at launch?

We will support BTC and BTCD for sure, and probably up to a dozen total coins, including most of the SuperNET core coins that support gen1 multisig.

Initial launch will not support all coins and all exchanges and all trade methods.
I believe in incremental improvements, so at first it will be a limited set of coins, limited set of exchanges and without tiernolan

that is an old list, I know a lot more are in testing, the MGW process it totally independent of InstantDEX, it is just a special case asset and InstantDEX supports all NXT assets. MGW can support any gen1 coin that supports multisig, just a matter of getting enough demand.

As far as direct local wallet trading, the coins that support tiernolan's cross chain protocol, which should be most of them. The old up for that is that only about one third of the bitcoin miners even accept these transactions, and there are some other fixes needed to make it totally secure.

I have designed InstantDEX to be modular, so as soon as there is a viable way to trade coins, I can add it into the overall structure. So new coins, new exchanges, new methods are all possible to add. However, we have to start somewhere before we can get the ability to trade any coin that is anywhere. Keep in mind that the tiernolan approach has some latency issues, so it has some tradeoffs but it will be the way to do totally peer to peer trading.

It sounds like you are impatient, but we need to get through a few test/debug cycles with the core coins and exchanges before we start expanding. Once the baseline is working, it will be minimal effort to add a new coin or exchange

Yes.  The question is whether you actually use (and backup) it in the unencrypted form first, or whether you encrypt it immediately and only then make a backup and start to use it.  You should definitely do the latter.

You could keep everything in MGW crypto assets on the NXT blockchain and not need to have any local wallets.
There will be alternate solutions later in the year too, but at first the NXT asset method is the way to get multicoin without multiple wallets

The list of MGW coins I am actually not aware of the current list, but they are working on quite a few of the top volume coins.

Currently the following exchanges are supported:

        { (void *)"poloniex", (void *)ramparse_poloniex, (void *)poloniex_supports, (void *)poloniex_trade, },
        { (void *)"bittrex", (void *)ramparse_bittrex, (void *)bittrex_supports, (void *)bittrex_trade },
        { (void *)"bter", (void *)ramparse_bter, (void *)bter_supports, (void *)bter_trade },
        { (void *)"btce", (void *)ramparse_btce, (void *)btce_supports, (void *)btce_trade },
        { (void *)"bitfinex", (void *)ramparse_bitfinex, (void *)bitfinex_supports, 0 },
        { (void *)"bitstamp", (void *)ramparse_bitstamp, (void *)bitstamp_supports, 0 },
        { (void *)"okcoin", (void *)ramparse_okcoin, (void *)okcoin_supports, 0 },
        { (void *)"huobi", (void *)ramparse_huobi, (void *)huobi_supports, 0 },
        { (void *)"bityes", (void *)ramparse_bityes, (void *)bityes_supports, 0 },
        { (void *)"lakebtc", (void *)ramparse_lakebtc, (void *)lakebtc_supports, 0 },
        { (void *)"exmo", (void *)ramparse_exmo, (void *)exmo_supports, 0 },
        { (void *)"btc38", (void *)ramparse_btc38, (void *)btc38_supports, 0 },

There is no simple answer to this. The specifics depend on how to set things up.

Here is an example:

Alice has X amount of coin A as an MGW coin asset, Bob has Y amount of coin B on bittrex and some NXT locally.
you have enabled punch through trading on bittrex so have an acct with J amount of BTC in your bittrex acct.

They agree to trade A for B at a specific price.

Now clearly, this cant be done directly, we rely on the property of coin ownership, ie what matters is the sum total of what you control. We assume that InstantDEX has found a path to connect the A and B at the agreed price, in fact it is the reverse. InstantDEX calculates all the possible prices by combining all the potential halves of the A <-> trade and displays the best one and presumably, either Alice or Bob selected the orderbook entry that creates this combination.

Now how can this possibly work? A is on the NXT AE as A/NXT and B is on bittrex as B/BTC
They are not interchangeable. However, we notice that there is a NXT/BTC market (at several places). To keep things simple(r) let us assume that the best price for NXT/BTC is on NXT AE.

A/NXT + BTC/NXT -> A/BTC and we already have B/BTC so put them together and we can go from A <-> B

Let us follow the money. Alice sells A for NXT and also buys BTC with that NXT and also uses the same amount of BTC to buy B on bittrex. Bob sells B for BTC and also sells that BTC for NXT and uses that NXT to buy A.

Alice: sold A, got NXT, uses NXT to get BTC, uses that BTC to get B, so net effect is A became B
Bob: sold B, got BTC, uses BTC to get NXT, uses that NXT to get A, so net effect is B became A

Keep in mind that if a sequence jumps out of the same exchange, you will have both positive and negative contributions of the same coin.

The above is just one possible sequence, but I hope it gives an idea of what InstantDEX is doing for you. I am debugging a plugin system to allow adding more and more methods to clear trades, so more and more exchanges can be supported, more and more methods of trading can be supported, eg. tiernolan atomic swap, telepods, etc.

James

tl:dr you do not have to run a local copy of a coin's wallet. after a trade the NET change will reflect the agreed upon trade and when using central exchanges you will need to be making funds balancing transfers (in BTC or NXT)

They are testing betaversion of their decentralized marketplace called Blockmarket.

Withthe syscoin ecommerce plugin i will develop

I do not think so - except for encrypting a previously unencrypted wallet.  In this case, you even invalidate all new addresses immediately.  (Since they keypool is flushed.)  But maybe I forgot something here, so please do not depend on that without further checking.

you need your password

You should create a new receiving address every time you are requesting a new payment to your wallet.